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The Labor Wedge: New Facts Based on US Microdata

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  • David Coble

Abstract

I document a new set of facts about the labor wedge in the United States. First, while the labor wedge is counter-cyclical, its cross-sectional variation is pro-cyclical. Second, this finding holds regardless of gender, marital status, age, race, education and income rank. In order to show these facts, I develop a simple heterogeneous-agent model, in which productivities are different across individuals. In addition, I show evidence that the variation in the aggregate labor wedge is explained partially (between 16 and 45 percent) by the variation in the aggregate heterogeneous productivities across individuals. Finally, I discuss implications for future related research.

Suggested Citation

  • David Coble, 2015. "The Labor Wedge: New Facts Based on US Microdata," Working Papers Central Bank of Chile 751, Central Bank of Chile.
    • Handle: RePEc:chb:bcchwp:751
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    File URL: https://www.bcentral.cl/documents/33528/133326/DTBC_751.pdf
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    References listed on IDEAS

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    Cited by:

    1. Lafourcade, Pierre & Gerali, Andrea & Brůha, Jan & Bursian, Dirk & Buss, Ginters & Corbo, Vesna & Haavio, Markus & Håkanson, Christina & Hlédik, Tibor & Kátay, Gábor & Kulikov, Dmitry & Lozej, Matija , 2016. "Labour market modelling in the light of the financial crisis," Occasional Paper Series 175, European Central Bank.

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